Power factor (PF) is a measure of electrical efficiency and is given by the ratio of kilo-watt (KW) to kilo-volt-ampere (KVA). KW is actual power consumed by a load whereas KVA is total power delivered to the load. The power consumed is referred to as active power and the remaining is referred to as re-active power, and only the active power does the actual work. However, even though reactive power does not perform any actual work, it still needs to be generated and carried.
Power factor varies between 0 (least efficient) and 1 (most efficient). When PF<1, KVA travels through the wires between the load and the utility grid, passing back and forth through, for example, a residential meter. Disadvantages of low power factor include, by way of example, substantially higher monthly electricity bills if reactive power is charged, large capacity payments for providing reactive power, and reduction of the lifetime of devices.
Improving the power factor is referred to as Power Factor Correction (PFC). Historically, PFC has been achieved through specialized, expensive and difficult-to-maintain hardware at the distribution or consumption site. However, existing approaches such as capacitor banks have a number of disadvantages. For example, capacitors are large, so the cost of plant real estate must be included in economic considerations. Additionally, capacitor banks can provide reactive power but they cannot absorb it, and capacitor banks typically have a life of less than ten years, thereby requiring repeated capital investments.